d. joint Regulation of the Bank of Italy and the Italian Securities and Exchange Commission (Consob) dated 29 October 2007, as amended, setting out the organisational requirements to be met by, among others, AIFMs;

e. Consob Regulation No. 20307 of 15 February 2018, setting out rules of conduct applicable to certain intermediaries, including AIFMs, with a view to protecting investor interests; and

f. Consob Regulation No. 11971 of 14 May 1999, as amended, regulating issuers of securities and including provisions concerning the marketing of fund interests.

1.2 Are managers or advisers to Alternative Investment Funds required to be licensed, authorised or regulated by a regulatory body?

Collective portfolio management is a regulated activity requiring prior authorisation (by the Bank of Italy), and the conditions to meet for the release of the authorisation incorporate those requested under the AIFMD.

The definition of collective portfolio management was narrow before the implementation of the AIFMD as it only covered contractual funds and SICAVs, so non-UCITS funds could be established also as unregulated structures.

Because the AIFMD applies to all AIFMs irrespective of the legal nature of AIFs, this regulatory framework changed with the implementation of the AIFMD. AIFs may now be established in contractual or corporate form, both structures being regulated by law. Also, in implementing the AIFMD, Italy gold-plated its provisions regulating sub-threshold AIFMs by requiring all AIF managers to be authorised (with limited regulatory differences between full-scope and sub-threshold managers).

Also investment advice is a regulated activity requiring prior authorisation (by Consob), and the conditions to meet for the release of the authorisation incorporate those requested under the MiFID. Investment advisers are not allowed to provide collective portfolio management in respect of an AIF, unless they are also authorised as AIFMs.

1.3 Are Alternative Investment Funds themselves required to be licensed, authorised or regulated by a regulatory body?

AIFs of a contractual nature do not require prior authorisation provided that they qualify as “Reserved AIFs”, which are reserved for subscription by “Qualifying Investors”, i.e.:

(i) professional investors under the MiFID;

(ii) entities and individuals making a commitment of €500,000 or more to the AIF; and

(iii) directors and employees of the AIFM (without a minimum commitment).

In all other cases an authorisation is required by the Bank of Italy.

Corporate structures (SICAFs) require prior authorisation by the Bank of Italy even if they are reserved to Qualifying Investors. SICAFs can be managed internally, in which case they have the double nature of AIF and AIFM, or externally by a third-party manager (an SGR or a full-scope EU AIFM), in which case they are only an AIF.

Reserved AIFs are subject to a more flexible regulatory regime. In particular: (1) commitments to a Reserved AIF may be drawn down on an as-needed basis; and (2) the Bank of Italy provisions on limitation and diversification of risk concerning the generality of AIFs do not apply. The governing documents of a Reserved AIF must contain provisions setting out, among other things, its investment restrictions, the maximum level of leverage the AIF can employ and the types and sources of permitted leverage.

The regulatory regime applicable to all AIFs requires the appointment of a depositary carrying out safekeeping and other functions in accordance with the AIFMD. Only Italian banks and investment firms (or local branches of EU banks and investment firms) can be authorised by the Bank of Italy to carry out depositary functions.

Further, all AIFs are subject to reporting obligations vis-à-vis Bank of Italy and Consob.

Under Italian law, AIFs can be established in the form of closed-ended or open-ended funds. Investors can make commitments to closed-ended funds during one subscription period (starting immediately after the fund is set up) or more subscription periods, as provided for by the rules. Subscribed units are reimbursed only at the end of the closed-ended AIF’s term or, before such term, upon the occurrence of certain circumstances as provided by the rules. Therefore, unlike open-ended funds, investors may invest in closed-ended AIFs only during a specific subscription period and may not obtain the reimbursement of their units at any time.

However, AIFs may be established in the form of open-ended funds only if they invest in securities listed on a regulated market, bank deposits and/or up to 20% of the fund’s assets, securities not listed on a regulated market. Considering the typical operations of private equity funds and real estate funds, it is correct to infer that they may not be established as Italian open-ended AIFs.

As already mentioned, Bank of Italy regulations include limitations and diversification of risk provisions applying to the generality of AIFs other than Reserved AIFs. This notwithstanding specific limitations apply to certain categories of Reserved AIFs (e.g. reserved credit funds are subject to a 10% diversification limit).

As to the different investment strategies, applicable regulations require that real estate funds invest at least ⅔ of the aggregate value (reducing to 51% in specific circumstances) in real estate assets (real estate properties, real estate companies and other qualified real estate assets). There are no specific definitions for private equity funds, hedge funds or credit funds.

1.5 What does the authorisation process involve and how long does the process typically take?

A company wishing to obtain authorisation as an SGR (the Italian AIFM) to manage AIFs must satisfy a number of conditions, including the following: (1) company limited by shares (legal form); (2) registered office and headquarters in Italy; (3) initial share capital of €500,000 (for full-scope SGRs) or €50,000 (for sub-threshold SGRs); (4) directors, general managers and statutory auditors meeting certain moral, independence, experience, skills, fairness and other requirements; (5) owners of qualifying holdings meeting certain moral, skills and fairness requirements; and (6) group structure not preventing a sound and prudent management and the effective exercise of supervisory functions by the Bank of Italy and Consob. If all applicable legal and regulatory requirements are complied with and the conditions for a sound and prudent management are met, the Bank of Italy will release the authorisation. An authorisation process may take five months or more to complete.

A substantially similar authorisation process applies to internally managed SICAFs, considering that it has the double nature of AIF and AIFM.

The authorisation of an externally managed SICAF benefits from certain simplifications.

As already mentioned, Reserved AIFs of a contractual nature are not subject to prior authorisation.

1.6 Are there local residence or other local qualification requirements?

There are no local residence or other local qualification requirements for shareholders, directors or officers of an Italian AIFM.

1.7 What service providers are required?

AIFMs are required to maintain control functions (compliance, risk management and internal audit) and their accounts are subject to audit by a duly licensed auditing firm. Control functions may be delegated to service providers, subject to prior notification to the competent authorities.

In order to ensure that the assets of a fund are effectively protected against the undue actions of the AIFM, a bank or an investment firm must be appointed by the AIFM as a custodian of the fund’s assets (including cash and other liquid assets). The AIFM’s instructions over the fund’s assets shall be implemented by the Depositary after having verified that they are in compliance with applicable law and regulations, as well as the fund’s constitutive documents. The depositary is required to act independently from, and in the interest of, all investors and is directly liable to the investors for any breach of its legal duties.

Valuation of real estate assets requires an assessment made, every six months, by an external and independent expert. This assessment is to be taken into consideration during the valuation process made by the AIFM.

An EU AIFM is entitled to manage Italian AIFs, following notification to the Bank of Italy by the competent authority of the home Member State under the AIFMD, provided that: (i) it is authorised to manage in its home Member State AIFs with characteristics similar to those it intends to establish and manage in Italy; and (ii) it has entered into an agreement with an Italian depositary which is suitable for ensuring that the latter has access to the information necessary for the performance of its duties.

The EU AIFMs shall be required to comply with any and all laws and regulations applying to the Italian AIF and, if the EU AIFM operates in Italy through a branch, also certain rules of conduct prescribed for Italian AIFMs.

Non-EU AIFMs are not entitled to manage Italian AIFs; the scenario will change with the extension of the AIMD passport to third countries.

1.9 What co-operation or information sharing agreements have been entered into with other governments or regulators?

We are not aware of any co-operation or information sharing agreements concerning the operation of AIFs other than those deriving from the AIFMD.

2. Fund Structures

2.1 What are the principal legal structures used for Alternative Investment Funds?

AIFs are almost invariably set up as closed-end Reserved AIFs of a contractual nature. Alternatively, externally managed SICAFs are also considered, especially in the real estate sector. At present, only a few cases of externally managed SICAF exist, most of which have been authorised upon transposition of the AIFMD, as they were already operating as corporate vehicles carrying out private equity or venture capital investments.

2.2 Please describe the limited liability of investors.

Under the legal segregation rules, the fund’s assets are protected against possible claims and legal actions filed by the creditors of the manager, other funds managed by it, the depositary and the investors. The fund’s creditors may only enforce their claims against the assets of the fund (i.e., not against those of the individual investors, or those of the manager, which is not liable for the fund’s debts to third parties).

2.3 What are the principal legal structures used for managers and advisers of Alternative Investment Funds?

The typical structure for managers of AIFs is the SGR, being an Italian company authorised by the Bank of Italy to provide collective portfolio management services. An SGR qualifies as a sub-threshold manager if the volume of its total assets under management is below certain thresholds established by the AIFMD and it has not opted into the full scope of the AIFMD.

2.4 Are there any limits on the manager’s ability to restrict redemptions in open-ended funds or transfers in open-ended or closed-ended funds?

As already mentioned, private equity funds and real estate funds may not be established as open-end AIFs under Italian regulatory provisions.

As to the closed-ended AIFs:

■ interests are reimbursed only at the end of the AIF’s term or, before such term, upon the occurrence of certain circumstances to the extent provided by the fund’s governing documents. There are no regulatory limits on the AIFM’s ability to restrict early redemptions; and

■ interests may be transferred in accordance with the fund’s governing documents. There are no regulatory limits on the AIFM’s ability to restrict transfer of interests.

2.5 Are there any legislative restrictions on transfers of investors’ interests in Alternative Investment Funds?

In case of transfer of interests in Reserved AIFs, the AIFM shall ensure that the acquiring party is a Qualifying Investor.

2.6 Are there any other limitations on a manager’s ability to manage its funds (e.g. diversification requirements, asset stripping rules)?

In general, Italian AIFs are subject to the Bank of Italy provisions on limitation and diversification of risk. As already mentioned, such provisions do not apply to Reserved AIFs, which are nonetheless required to comply with the principle of risk spreading.

Italian AIFMs are required to comply with applicable laws and regulations concerning asset management activities, amongst which it is opportune to mention (i) rules of conduct concerning, in particular, conflict of interest issues, and (ii) asset-stripping rules substantially reflecting the contents of the AIFMD.

3. Marketing

3.1 What legislation governs the production and offering of marketing materials?

An Italian full-scope AIFM must notify Consob of its intention to market a Reserved AIF in Italy indicating whether the fund is also expected to be marketed to professional investors in other EU Member States under the AIFMD. The notification must enclose the governing documents of the fund, the offering document and other documentation as indicated in Annex III or IV of the AIFMD, as applicable. Marketing activities can commence after Consob, having verified that the documentation complies with the AIFMD and its implementing provisions, issues a no-objection letter. This process takes some 30 days to complete. Sub-threshold managers are not required to go through this process to market their funds in Italy but do not benefit from the AIFMD passport provisions. Special provisions apply with respect to the marketing of EuVECA funds. If an Italian AIFM wishes to market a Reserved AIF in non-EU jurisdictions, it is required to submit a prior notification with the Bank of Italy and to comply with the private placement regime of the jurisdiction in which the marketing takes place.

When transposing the AIFMD into law, Italy cancelled its national private placement regime, which permitted the marketing of non-Italian AIFs by non-Italian AIFMs to Italian investors subject to an authorisation of the Bank of Italy. As a result, AIFs managed by non-EU AIFMs and non-EU AIFs managed by EU AIFMs may not currently be marketed to Italian investors. This marketing will be permitted when the third-country passport provisions of the AIFMD take effect with the adoption of the relevant delegated acts by the EU Commission (or in the context of the AIFMD review).

3.2 Is the concept of “pre-marketing” (or equivalent) recognised in your jurisdiction? If so, how has it been defined (by law and/or practice)?

The Italian regulator and supervising authorities did not provide any indication as to what constitutes pre-marketing or which documents can be shared in this phase, although we note EU proposal harmonising the definition of and conditions for pre-marketing of funds within the EU.

Having considered the provisions of the Italian Consolidated Finance Act, pursuant to which marketing of an AIF is the direct or indirect offering or placement at the initiative of the AIFM or on behalf of the AIFM of units or shares in an AIF, it is advisable that the AIFM does not share with the investors subscription documents nor any documents allowing the investors to complete their internal decision-making process.

3.3 What are the key content requirements for marketing materials, whether due to legal requirements or customary practice?

Information contained in marketing documents for Reserved AIFs must be accurate, comprehensible and non-misleading pursuant to applicable regulatory provisions. In addition, certain mandatory disclosures to potential investors are imposed by Italian and EU law. These include:

■ pre-contractual information on the manager, its services, some of its policies, the nature of the fund interests and connected risks, all costs to be borne by investors in connection with an investment in the fund and the classification of investors as professional or retail clients under the provisions implementing the MiFID;

■ an offering document concerning the fund containing the information set out in Article 23 of the AIFMD (the offering document); and

3.4 Do the marketing or legal documents need to be registered with or approved by the local regulator?

Please see question 3.1 above.

3.5 What restrictions are there on marketing Alternative Investment Funds?

When seeking commitments to a Reserved AIF, the manager must provide potential investors with the prescribed pre-contractual information, the offering document and (if fund interests are also offered to retail investors) the KID. Before accepting subscription agreements the manager must also comply with other requirements, including making appropriateness checks under the MiFID provisions and carrying out customer due diligence procedures under anti-money laundering and counter terrorist legislation. Special regulatory provisions apply when fund interests are offered to retail investors in Italy outside the principal or branch offices of the manager or of a licensed placement agent. These offerings must be carried out acting through licensed tied agents. Also, retail investors must be given the right to withdraw from their subscription agreements without paying any indemnity during a seven-day delay from the date of execution. Any breach of these provisions would make the agreements null and void.

3.6 Can Alternative Investment Funds be marketed to retail investors?

Please see question 3.5 above.

3.7 What qualification requirements must be carried out in relation to prospective investors?

3.8 Are there additional restrictions on marketing to public bodies such as government pension funds?

There are no restrictions on the marketing of Reserved AIFs to public bodies, additional to those concerning the categories of eligible investors (Qualifying Investors) and the use of the marketing passport.

3.9 Are there any restrictions on the use of intermediaries to assist in the fundraising process?

There are no particular restrictions on the use of intermediaries in the fundraising process for Reserved AIFs. Placement agents are frequently engaged by managers when marketing funds to non-Italian potential investors. Placement agents are instead rarely involved in a purely domestic fundraising.

3.10 Are there any restrictions on the participation in Alternative Investment Funds by particular types of investors, such as financial institutions (whether as sponsors or investors)?

There are no restrictions on the participation in AIFs of financial institutions, as sponsors or investors.

4. Investments

4.1 Are there any restrictions on the types of activities that can be performed by Alternative Investment Funds?

As mentioned, Reserved AIFs benefit from flexibility in construing their investment policy, as they are not subject to the Bank of Italy provisions on limitation and diversification of risk applicable to the generality of AIFs. Nonetheless, specific rules apply to credit funds (e.g. limitation on leverage and portfolio diversification).

4.2 Are there any limitations on the types of investments that can be included in an Alternative Investment Fund’s portfolio whether for diversification reasons or otherwise?

The governing rules of Reserved AIFs must contain provisions regulating (i) the types of investments to be made, and (ii) applicable investment restrictions (it being understood that Reserve AIFs have to comply with the principle of risk spreading).

As to the different investment strategies, applicable regulations require that real estate funds invest at least ⅔ of the aggregate value (reducing to 51% in specific circumstances) in real estate assets (real estate properties, real estate companies and other qualified real estate assets). There are no specific definitions for private equity funds, hedge funds or credit funds.

4.3 Are there any restrictions on borrowing by the Alternative Investment Fund?

The fund rules shall contain provisions governing the maximum level of leverage that the AIF can bear, the types and sources of permitted leverage. In determining the maximum level of leverage, SGRs must consider various factors in accordance with Section 15.4 of the AIFMD.

5. Disclosure of Information

5.1 What public disclosure must the Alternative Investment Fund or its manager make?

Reserved AIFs are not subject to public disclosure, except for the duty to publish in the AIFM’s website the KID related to those managed AIFs which are offered to retail clients.

5.2 Are there any requirements to provide details of participants (whether owners, controllers or investors) in Alternative Investment Funds or managers established in your jurisdiction (including details of investors) to any local regulator or record-keeping agency, for example for the purposes of a public (or non-public) register of beneficial owners?

In case of (i) the acquisition of a stake at least equal to 10% of the share-capital of an SGR, (ii) a variation on the stake held which entail to reach or exceed the threshold of 20%, 30%, or 50% of the share-capital of an SGR, or (iii) the control of the SGR, it is necessary a prior notice to the Bank of Italy. The Bank of Italy shall assess, inter alia, that the prospective shareholders own the requirement of honourability, correctness and competence. Shareholding in SGRs are also subject to publicity requirements in the competent Companies’ Register.

The same requirements apply, mutatis mutandis, to shareholdings in SICAFs.

5.3 What are the reporting requirements in relation to Alternative Investment Funds or their managers?

For each managed fund, the manager must prepare and make available to investors the following documents in the format prescribed by applicable regulatory provisions:

■ annual financial statements within six months of the end of any financial year (or of the shorter period in relation to which profits are distributed);

■ semi-annual financial statements within two months of the end of any six-month calendar period; and

■ a prospectus showing the value of the fund interests as at the end of any calendar semester.

In addition, AIFMs are subject to ongoing regulatory requirements concerning the operation of their business, the AIFs managed, reporting duties to the Bank of Italy and Consob, etc.

5.4 Is the use of side letters restricted?

Managers can issue side letters to individual investors but any preferential treatment an investor obtains under a side letter or its subscription agreement must comply with fairness and disclosure principles provided for by the AIFMD. Also, side letters and subscription agreements may not contain terms conflicting with those of the fund’s governing rules.

6. Taxation

6.1 What is the tax treatment of the principal forms of Alternative Investment Funds identified in question 2.1?

Italian tax rules consider all AIFs opaque (i.e., non-transparent) entities, regardless of their legal form (i.e., both contractual funds and SICAFs), and treat them as separate taxable persons for Italian purposes. To avoid double taxation, AIFs are fully exempt from income taxes in respect of profits and gains realised in respect of their investments. An exemption applies also in respect of other direct taxes, such as the regional tax on productive activities, although funds established in corporate form (i.e., SICAFs) remain subject to the regional tax on certain management and subscription fees.

6.2 What is the tax treatment of the principal forms of investment manager / adviser identified in question 2.3?

In principle, the SGR is subject to the ordinary corporate income tax (IRES) at a rate of 24%. The taxable base for IRES purposes is equal to the difference between (a) the revenues accrued in each tax period (as shown in the income statement), which include any management fees and advisory fees (if any) received from the investors of the AIF, and (b) the costs related to management expenses and (any) interest payable, adjusted according to the provisions of the tax legislation on business income (such as the provisions on tax changes and deductible/non-deductible components). The SGR is subject also to local business tax (IRAP) at rates variable depending on the region where the activity is exercised (generally, the ordinary rate for the SGR is equal to 4.65%).

6.3 Are there any establishment or transfer taxes levied in connection with an investor’s participation in an Alternative Investment Fund or the transfer of the investor’s interest?

No, there are no establishment or transfer taxes levied in connection with an investor’s participation in an AIF or the transfer of the investor’s interest. By express provision of law, the transfer of units of collective investment undertakings, including shares of AIFs set up in a corporate form, is also generally excluded from the application of the financial transaction tax.

6.4 What is the tax treatment of (a) resident, (b) non-resident, and (c) pension fund investors in Alternative Investment Funds?

While AIFs are exempt, income taxes, in principle, apply at the level of investors. Italian tax rules characterise as ‘income from capital’ all profits and gains derived from the investment in AIFs. Such income is subject to a withholding tax levied at a standard rate of 26% (although lower rates or exemptions apply in respect of certain investors). The taxable base includes all proceeds effectively distributed to the investors, as well as the balance between the value of the units or shares upon sale or redemption or liquidation of the fund and the subscription or purchase value of the same units or shares.

With reference to investors resident in Italy for tax purposes, the 26% withholding tax applies as (a) advance taxation (ritenuta a titolo d’acconto), if they are holding the units/shares of the AIF in a business capacity (in this case, ordinary personal or corporate income taxes will apply at the investor’s level), and (b) final taxation (ritenuta a titolo d’imposta), for all other investors, including those exempt from corporate income tax (e.g. non-commercial entities, individuals not acting in a business capacity, etc.).

Profits realised by qualifying Italian pension funds are not subject to withholding tax, although they might be subsequently taxable in the hands of the pension fund or of the ultimate beneficiaries (although certain exemptions may apply).

Investors not resident in Italy (including non-Italian pension funds) are, in principle, also subject to the 26% withholding tax applied as a final taxation (ritenuta a titolo d’imposta). However, the greatest part of non-resident investors are generally eligible for a full exemption from Italian taxation, to the extent that they fall in one of the following categories:

a) international entities established in accordance with international treaties;

b) central banks or a similar entities;

c) investors resident for tax purposes in a ‘white-listed country’ (i.e., a jurisdiction which is recognised as having in place with Italy an effective exchange of information for tax purposes); and

d) ‘institutional investors’ established in a white-listed country, also if they are not subject to taxation; this definition includes entities whose activity consists in investing or managing investments, for their own benefit or on behalf of third parties, regardless of their legal status or tax treatment in the country of establishment (typically, international investment funds and non-Italian pension funds fall in this category).

6.5 Is it necessary or advisable to obtain a tax ruling from the tax or regulatory authorities prior to establishing an Alternative Investment Fund?

No, it is not necessary to obtain a tax ruling from the tax or regulatory authorities prior to establishing an AIF.

6.6 What steps have been or are being taken to implement the US Foreign Account and Tax Compliance Act 2010 (FATCA) and other similar information reporting regimes such as the Common Reporting Standard?

In January 2014, the United States of America and the Republic of Italy signed an intergovernmental agreement (IGA) to improve international tax compliance and to implement in Italy the FATCA. Upon the ratification of the IGA, Italy also approved specific primary and secondary legislation to implement the CRS. Italian reporting financial institutions (such as SGRs which manage AIFs) are required to carry out the relevant due diligence activities – and to request appropriate declarations and certifications to the investors – for identifying the accounts/relationships to be exchanged (including the investment in an AIF) and for complying with applicable reporting procedures.

6.7 What steps are being taken to implement the OECD’s Action Plan on Base Erosion and Profit-Shifting (BEPS), in particular Actions 6 and 7, insofar as they affect Alternative Investment Funds’ operations?

Italy has adopted specific provisions on hybrid mismatches and has amended the domestic definition of permanent establishment (consistently with the updated version of Article 5 of the OECD Convention Model).

The scope of these new rules and their potential influence on AIF’s operations are still unclear, since no guidelines and/or official clarifications have been released by the Italian tax authorities in this respect; however, the first comments of the legal doctrine tend to exclude any material impact on the structuring and tax treatment of domestic Italian AIFs.

6.8 Are there any tax-advantaged asset classes or structures available? How widely are they deployed?

Certain AIFs can benefit from special tax incentives.

Tax advantages are granted, among others, for:

(i) investments into venture capital funds that invest at least 85% of their assets in certain small and medium-sized enterprises (SMEs) not listed in regulated markets and based in Italy (profits and gains deriving from such investments are fully exempt from the 26% standard withholding tax); and

(ii) investments into funds that invest at least the 70% of their assets into ‘innovative’ start-ups and SMEs and hold such investment for at least three years (the tax incentive consists of a tax credit or of a deduction from the taxable base, depending on the nature of the investor).

The above regimes were introduced a few years ago, but the Italian market for venture capital investments has not evolved as in other jurisdictions. Therefore, the tax incentives have been strengthened various times, including at the end of 2018. There is currently a lot of interest from sponsors and managers to set up new incentivised AIFs dedicated to venture capital investments.

6.9 Are there any other material tax issues for investors, managers, advisers or AIFs?

A typical material issue for managers concerns the tax treatment of the carried interest.

Until 2016, there were neither statutory rules nor revenue guidelines specifically dealing with the Italian taxation of carried interest schemes, so a careful planning was required in order to efficiently structure the carried interest for managers and minimise the risk that it could be treated as employment-related income (subject to income taxation at progressive marginal rates, up to 43% plus surcharges).

According to the new provisions, approved in 2017 (which de facto operate as ‘safe harbour rules’, as clarified also by the Italian tax authorities), income from the participation in companies, entities or investment funds (including AIFs) established in Italy, or in a jurisdiction allowing an adequate exchange of information, arising from shares or other similar financial instruments granting enhanced economic rights (i.e., the carried interest shares or units), will be deemed, by operation of law, as investment income subject to a flat taxation at 26%.

This safe harbour applies, as far as AIFs are concerned, provided that all of the following conditions are met:

a) the carried interest holders collectively invest in the AIF (directly or indirectly) an amount of at least 1% of the total commitments;

b) carried interest distributions are subordinated to those due to ordinary investors; and

c) carried interest units/shares are held for at least five years.

If one or more of the above conditions are not satisfied, the carried interest could still be considered as investment income, subject to a case-by-case analysis and to careful planning and scrutiny. The Italian tax authorities have issued useful interpretative guidelines and have confirmed that they are willing to analyse specific situations if a ruling application is submitted to them.

6.10 Are there any meaningful tax changes anticipated in the coming 12 months?

Pursuant to a recent Italian law, a favourable tax treatment will apply, starting from 2020, to certain European Long-Term Investment Funds (i.e., so-called “ELTIFs”, a special category of AIFs) that invest at least 70% of their commitments in eligible instruments issued by companies resident in Italy (or with an Italian permanent establishment). More specifically, individual resident investors – subject to maximum investment thresholds and to a minimum holding investment period of five years – should benefit, starting from 2020, from (a) an exemption on all future profits and gains derived from such ELTIFs, and (b) an exemption from inheritance tax.

7. Reforms

7.1 What reforms (if any) are proposed?

In Italy, the categories of Qualifying Investors in Reserved AIFs are likely to be modified in the near future. In addition to professional investors (and to directors and employees of the AIFM), these currently include retail investors committing €500,000 or more to the AIF. The €500,000 threshold has been criticised by the industry as too high, given that non-Reserved AIFs are also subject to strict prudential requirements that are not compatible with the features of many AIFs, including private equity and venture capital funds. The Italian regulators are considering different protections for retail investors wishing to invest in Reserved AIFs, focusing on the requirement that their admission as investors is based on suitability assessments carried out under MiFID II. It is anticipated that, with the introduction of this requirement, the €500,000 threshold will be eliminated or substantially reduced.

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